OUR Rescue (formerly Operation Underground Railroad) currently maintains a 4-star rating with Charity Navigator (CN). What some donors may not realize is that Charity Navigator’s ratings are largely automated and based on what charities report about themselves in their unaudited IRS tax Forms 990.
CharityWatch’s analysis of OUR Rescue’s 2024 IRS Form 990 and audited financial statements found that the charity omitted millions in legal expenses from its functional expense reporting in 2024. Because Charity Navigator’s Accountability & Finance “beacon” accounts for 25% of a charity’s overall score, this reporting decision has a direct impact on its rating.
CharityWatch routinely analyzes charity tax filings in which we identify information that is incomplete, inconsistent, incomparable, and even blatantly inaccurate. Donors who make giving decisions based on automated charity ratings are putting trust in information that has not been vetted by an independent third-party capable of identifying and correcting for errors that impact the very ratings they are relying on.
OUR Rescue reported approximately $6.6 million in legal expenses in 2024 (IRS Form 990, Part IX, line 11b, & Schedule D, Part XIII). Yet, more than $4.8 million of this amount does not appear in the organization’s Statement of Functional Expenses in its IRS tax Form 990. This is the section of the form in which a charity allocates its expenses to show how much it is spending on its programs as compared to overhead, which includes management and fundraising costs.
This omission has a direct and measurable impact on how the organization’s program and overhead spending is presented. Based on the charity’s self-reported figures, approximately 70% of its total expenses are allocated to program services. By contrast, once the nearly $4.9 million in legal expenses are added to the charity’s 2024 management expenses (as would typically be expected for litigation-related expenses) the program percentage drops to approximately 62%.
That difference is not trivial. It can materially change how donors perceive the organization’s efficiency, particularly in a rating environment where small shifts in program ratios can influence whether a charity appears highly efficient or not. In effect, the exclusion of these expenses allows millions of dollars in overhead to disappear from the very metrics donors rely on to evaluate how much of their donation is actually going to programs.
In December 2025 CharityWatch reached out to OUR Rescue with questions about its financial reporting. In response, OUR Rescue stated that these legal expenses were tied to “extraordinary litigation matters” that did not “benefit, support, or relate to the conduct of the organization’s mission or ongoing business operations,” and therefore should not be included in functional expense reporting.
The implications of this position are straightforward and troubling.
If these legal expenses truly do not relate to the organization’s mission, management, or fundraising, then donors must ask why charitable funds were used to pay for them at all. Spending millions of dollars on activities the organization itself says are unrelated to its charitable purpose raises serious questions about whether or not it is complying with laws governing nonprofit organizations.
Under IRS rules, charitable organizations must use their resources to further charitable activities. To maintain tax-exempt status under Section 501(c)(3), a public charity must be “organized and operated exclusively for exempt purposes.”
This makes OUR Rescue’s position especially significant: if the organization is correct that millions in legal expenses are unrelated to its mission or operations, donors are left to question whether those expenditures are consistent with the requirements for OUR Rescue maintaining its tax-exempt status.
If, on the other hand, these legal expenses do relate to the organization’s operations and support its charitable exempt purpose, that would mean that they should have been included in the charity’s functional expense reporting. For example, if the charity spent funds to defend itself or its leadership in a legal dispute, or incurred other types of legal expenses in the course of its charitable work, then excluding this spending from functional expenses would likely understate overhead and overstate program spending.
In its December 2025 response to CharityWatch’s initial set of questions, OUR Rescue cited U.S. GAAP for not-for-profit entities (ASC 958-720 and ASC 958-720-45) to support its position that these legal expenses should be excluded from functional expense reporting in its audit.
However, those same standards emphasize that expenses must be reported based on their functional purpose. That is, whether they relate to program services, management and general activities, or fundraising. ASC 958-720-45 makes clear that functional expense reporting is intended to reflect the activities that constitute the organization’s operations, and that costs should be allocated when they support those activities. IRS Form 990 instructions reflect a similar requirement.
In our follow up inquiry on March 4th, 2026, CharityWatch asked OUR Rescue to cite the specific guidance it relied upon when deciding to omit millions in legal spending from its audit and Form 990 functional expense statements, and to provide us with a copy of that guidance so that we can fact check it. OUR Rescue’s senior vice president of finance responded that he would “work on providing a response soon.” However, as of March 26th, 2026, we have not received any additional communications.
Legal expenses incurred in connection with litigation involving the organization, its leadership, or its activities are typically considered part of management and general expenses, as they relate to governance and the ongoing operations of the organization. The charity’s position that nearly $5 million in legal costs fall entirely outside all functional categories is unusual. By definition, expenses incurred by an operating organization are generally connected in some way to carrying out, sustaining, or defending that organization. Excluding such a large amount of expenses from functional reporting removes them from the framework donors rely on to assess how their donations are used.
Charity Navigator’s ratings rely, in part, on program expense ratios derived directly from Form 990 data. Because these ratings are largely automated, they generally do not adjust for omissions or unusual reporting decisions.
By excluding approximately $4.9 million in legal expenses from functional classifications, those costs are removed from the efficiency metrics that feed into Charity Navigator’s rating of OUR Rescue. This may make the charity appear more efficient than it otherwise would if those expenses were fully reflected, potentially impacting its 4-star score.
Charity Navigator, using OUR Rescue’s self-reported Form 990 figures that exclude more than $4.8 million in legal expenses, computed that the charity spent 69.7% of its total expenses on programs in 2024. It assigned the charity an overall score of 96% out of 100% and a 4-star rating based on criteria that includes a program spending measurement.
This contrasts with CharityWatch’s computation of 62%, which reflects what OUR Rescue spent on its programs once the omitted legal expenses are added back to its 2024 management expenses. However, this is not our final, computed program percentage figure for OUR Rescue for 2024.
CharityWatch also identified $948,877 of “Cost of Merchandise Sold” (also called Cost of Goods Sold, or COGS) in the charity’s functional expense reporting, of which it allocated $933,877 to program expense and $15,000 to fundraising. COGS are supposed to be reported in a different section of the form (IRS Form 990, Part VIII, lines 10a-10c), not as program or fundraising expenses. Once we adjust COGS out of the charity’s 2024 functional expense reporting, its final computed program percentage decreases from 62% to 61%.
We can only speculate as to whether OUR Rescue’s reporting choices were motivated by a desire to improve its Charity Navigator rating or to otherwise influence donors’ perceptions about how efficiently it is operating. Irrespective of its motivation, these choices have the result of making it appear to be operating more efficiently than it actually is.
CharityWatch assigned a “?” rating to OUR Rescue for 2024 given that we ultimately deemed the charity’s financial reporting to be unreliable for purposes of computing how efficiently it is raising and spending public dollars.
These financial reporting issues arise in the context of significant legal controversies involving OUR Rescue’s founder and former CEO, Tim Ballard, who departed the organization in 2023.
Multiple civil lawsuits have been filed alleging misconduct, including claims of sexual assault, coercion, and abuse of authority during anti-trafficking operations. According to reporting by outlets such as WIRED and The Salt Lake Tribune, some allegations involve the use of an undercover tactic sometimes referred to as a “couples ruse,” in which women were allegedly asked to pose as Ballard’s partner during operations. Ballard has denied these allegations, and no criminal charges have been filed. In addition, some cases have been dismissed. However, other civil litigation cases remain ongoing.
These matters are directly relevant to the organization’s financial reporting. Legal expenses of the magnitude reported in 2024 may be connected to defending the organization, its leadership, or activities conducted under its name, making their classification and disclosure especially important for donors.
OUR Rescue’s Form 990 reports substantial payments to independent contractors, including multiple six-figure payments to individuals identified only as “anonymous individual, available upon request.” While the organization cited safety and operational concerns as the reason for anonymity, it did not provide the requested identities.
This lack of disclosure limits the ability of donors and analysts to assess potential conflicts of interest, related-party transactions, or whether individuals connected to past leadership remain financially involved with the organization.
On December 15th, 2025, CharityWatch sent a detailed inquiry to OUR Rescue requesting clarification on several issues identified in its audit and Form 990.
Among the questions posed:
OUR Rescue provided partial responses, explaining its accounting treatment and stating that certain contractors were kept anonymous for security reasons. It also stated that the former board member referenced in its audit was not one of the anonymous contractors.
On March 4th, 2026, CharityWatch submitted follow-up questions seeking further clarification, including whether charitable funds were used to pay expenses the organization characterizes as unrelated to its mission and how such expenses could reasonably fall outside all functional categories.
As of the date of publication, OUR Rescue has not responded to these follow-up questions, including our direct question as to whether or not Ballard was one of the “Anonymous” contractors receiving six-figure payments from the organization.
The issues identified in OUR Rescue’s filings highlight a broader problem: automated charity ratings are only as reliable as the data they rely on. Many donors seek out charity ratings when trying to understand if their donation to a particular organization will be used efficiently and responsibly. When rating systems take self-reported financial data at face value without adjusting for omissions or inconsistencies, they can produce ratings that appear authoritative but may not reflect what donors think they do.
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| Charity | |
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| OUR Rescue |
